Modern Continental forever linked to failures

Saturday

Jun 28, 2008 at 12:01 AMJun 28, 2008 at 10:14 PM

By the time prosecutors filed their charges against Modern Continental on June 20, alleging fraud and false statements involving work on the Big Dig, the vast empire that proud Italian immigrant Les Marino built with partner Kenneth Anderson had all but dissolved.

Jon Chesto

Les Marino certainly wouldn't have wanted his dream to end this way, buried in a basement beneath a small office building near the Dedham-Boston line.

Marino, the proud Italian immigrant who co-founded Modern Continental 41 years ago, once had a headquarters befitting his grand ambitions: a shiny, multi-million-dollar property on Memorial Drive in Cambridge overlooking the Charles River.

But the construction company's current address doesn't have water views, or any views at all. Instead, the headquarters location that Modern lists in court papers is on Milton Street in Dedham across the street from a couple of auto repair shops. No one answered Modern's two unmarked, locked office doors on Friday at the back end of a basement hall.

By the time prosecutors filed their charges against Modern on June 20, alleging fraud and false statements involving work on the Big Dig, the vast empire that Marino built with partner Kenneth Anderson had all but dissolved. The company was just a shell of its former self when Modern filed for bankruptcy protection on June 23 - more than three-and-a-half years after Marino's death.

It wasn't supposed to end this way. At Modern's peak seven years ago, it employed 4,200 people in 20 states and reported annual revenues of $1.1 billion. Modern had become one of the East Coast's biggest construction companies - a long way from its humble beginnings in 1967.

Modern's first job was a modest sidewalk project in Peabody. But the company would eventually make its mark on many of the state's most visible public works projects. The Orange Line extension through Jamaica Plain. The expansion of Logan Airport's international terminal. The revival of the Old Colony rail line. The cleanup of the Boston Harbor. The widening of Route 3 north to New Hampshire. And, of course, the Big Dig.

Modern hitched its star to the $15 billion Central Artery project, becoming its largest contractor. Certainly, Marino and the others at Modern knew the gravy train would come to an end at some point once the project was done. But there's no way they could have known that their company eventually would be linked with the project's many problems, including leaky slurry walls and a fatal ceiling collapse two years ago.

Modern's problems, however, were already well under way by the time those incidents occurred.

Modern failed to meet certain financial covenants in its financing agreements in the fall of 2001, according to documents filed in bankruptcy court in Boston on Tuesday. Modern also suffered losses on certain construction jobs and a boondoggle of an investment in a property at 470 Atlantic Ave. in downtown Boston.

Within two years, Modern posted annual losses of more than $174 million. The company's financial situation prompted its primary bonding company, St. Paul, to stop issuing bonds for future work starting in early 2004.

The doors continued to shut in May of that year when the state barred Modern from future highway projects following an ongoing dispute over delays in the Route 3 expansion.

Quincy construction magnate Jay Cashman was enlisted later that year to help Modern wrap up much of its work. Modern and Jay Cashman Inc. billed the arrangement as a merger at the time. But it turned out that Cashman's role at Modern was more as a consultant than a chief executive, and Cashman is no longer involved with Modern. By the time that year was over, Marino had died at the age of 69.

If the previous financial problems didn't spell the end for Modern, Marino's death certainly did. With the company's driving force no longer around, the remaining managers began to wind down Modern's operations.

Modern steadily liquidated most of its assets during the past four years, all under the watchful eye of St. Paul, which has since merged with Travelers.

Modern is trying to put the finishing touches on a handful of projects in Massachusetts and New York. Only about 55 employees remain with the company.

Modern cited its ongoing disputes over Big Dig billing with Massachusetts officials as the reason for its Chapter 11 filing in bankruptcy court. The company says it is still waiting for at least $73 million in payments from the state.

Meanwhile, Modern will need to appear in a separate federal court to defend itself against a series of charges accusing it of not following the proper construction procedures at the Big Dig, leading to the main tunnel's slurry wall blowout in 2004 and the ceiling collapse that killed Milena Del Valle in 2006.

The company, of course, denies responsibility for both incidents, and claims it was simply following the contract plans and specifications it was given.

There's plenty of blame to go around for what happened on the Big Dig, but Modern already has become synonymous with the project's cost overruns and mistakes. Should Modern be held accountable for the Big Dig mess? That's up to the courts to decide.

Either way, the company that Marino built probably won't be remembered for the well-known projects that turned out alright, just for the problems it left behind.

This is how a failed dream so often ends - not with a bang, but with an empty silence in a dark, basement room on the outskirts of town.

Jon Chesto is the business editor of The Patriot Ledger. He may be reached at jchesto@ledger.com.

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